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Elaborating on the reasons for the transformative shift in Delhi-NCR real estate growth, Santhosh Kumar, Vice Chairman, ANAROCK Property Consultants, stated, “India's economy is experiencing significant growth and its stock market is booming. Consequently, substantial investments are flowing into the real estate sector, which has seen remarkable improvement over the past three and a half years. Notably, the office segment has rebounded and demonstrated impressive growth.”
Rishi Raj, Chief Operating Officer, Max Estates Ltd. articulated, “Land prices have recently increased, resulting in a scarcity of land within the urban areas of the National Capital Region market. Additionally, there is a substantial densification of properties, especially in areas with higher rents and new developments. These trends indicate ongoing transformations influenced by escalating land prices and evolving market dynamics.”
Mudassir Zaidi, Executive Director-North, Knight Frank India added, The infrastructure development in Gurugram has lagged significantly. Unlike Gurugram’s reactive approach, Noida has proactively advanced its infrastructure, boosting the commercial real estate market. As a result, Noida's share of commercial office space has surged from about 30% to nearly 45-50% recently. If Gurgaon's infrastructure does not adapt swiftly, its real estate significance may diminish, while Noida and emerging micro markets will continue to attract substantial interest and investments.”
Sharing his perspective on the growth of the affordable housing segment in the NCR region, Mohit Arora, Chief Executive Officer, ATS HomeKraft, said, “Affordable housing has often been discussed, but rarely enacted. In the last four to five years, we have launched approximately 7,600 units, with 88% priced below three crores and only 12% exceeding that amount. Our approach involves strategic partnerships with landowners and suppliers to reduce costs and innovate solutions. An example is our project in Greater Noida, launched at 3,200 per square foot with a 20% margin by completion despite challenges like COVID.”
Kalyan Chakrabarti, CEO, Emaar India added, “Due to affordability issues, many developers are shifting to mid or luxury segments, which appear very appealing. In the post-COVID era, there has been a big push on the premium segment. While there are numerous new developments on the horizon, it is evident that real estate has evolved more into a financial services business. Effective daily management of cash flows and balance sheets is crucial; failure to do so may result in significant issues. Developers must possess the capability to build a strong brand, deliver on commitments, ensuring customer saisfaction even during economic challenges. The market will differentiate between those who can sustain through cycles and those who cannot, with only the most resilient and committed enduring in the long term.”
Addressing the potential future changes in retail real estate dynamics and their impact on customer experience and development planning, Abhishek Trehan, Executive Director, TrehanIRIS, stated, “Despite the city's retail density lagging behind global standards, there exists significant potential for growth, as evidenced by the substantial contributions of retail developments within Delhi-NCR. Quality developments in retail are capital intensive, requiring significant investment in land acquisition and building financing, and navigating the challenges posed by retailers. The high demand for meticulous management and substantial CapEx investments often deters many developers, resulting in limited quality retail supply. For example, within a 2-kilometer span, only 2 million out of 16 million square feet of commercial space may be viable and successful due to factors like product mix and infrastructure demands. Observing international developments in places like Singapore, Hong Kong, and Dubai, there is ample opportunity for intelligent retail growth here, fostering optimism for the future.”
Santhosh Kumar agreed, “In the retail sector, the primary challenge currently is the lack of quality supply. Many retail developments fail due to uncertain tenant mixes, whereas those managed and retained by their owners succeed, seeing rental appreciation and interest from institutional investors. Notably, Blackstone's acquisition of nine retail malls has demonstrated significant rental success.”
LUXURY HOMES TAKE CENTRE STAGE
The increasing demand for luxury residences is driven by rising disposable incomes, the influence of global lifestyle standards, growing segment of HNIs and NRIs interest in India for investment opportunities. As Ravi Shankar Singh, Managing Director, Residential Transaction Services, Colliers India, stated, “We have observed a significant increase in luxury real estate sales nationwide and particularly in Delhi-NCR. And with times, the definition of luxury has also evolved. In Noida, we have observed significant developments. For a long period, Noida's apartment sizes were constrained with minimal supply, typically ending at about 2000 sf ft. However, there is now a clear demand for the 3000 – 4000 sq ft luxury apartment category.”
Mudassir Zaidi expressed similar view, “Since the period leading up to and following the pandemic, there has been a significant shift towards premium real estate, with currently over 70% of transactions being in the luxury segment.”
Amit Goyal, Managing Director, India Sotheby's International Realty added, “We have seen substantial spending by luxury consumers, not only on real estate but also on amenities. For luxury residential, the neighbourhood plays a significant role. There has been an increase in luxury projects with serviced apartments, golf courses, and other high-end amenities that were not as prevalent 15 or 20 years ago. Also, we observe that luxury projects in developed nations and gateway cities typically start at $2,000, with prices rising to $6,000-7,000 per foot. Considering the costs of land, approvals, and construction, prices in India are still economical. With an inflation rate of 7%, prices are expected to increase. Many NRI families are consolidating their real estate portfolios in India, selling jointly owned properties and investing in projects with better amenities and easier maintenance. On an average, NRIs constitute approximately 15% of the sales in luxury real estate projects.”
Gurpal Chawla, Managing Director, TREVOC added, “Today, the focus is on lifestyle and experience. In Gurugram, majority population is under 35 years old, and major companies are establishing their offices here. As a result, salaries are increasing and people are spending more. Consequently, there is a heightened demand for luxury apartments, driven by younger demographic. I believe, luxury should be accessible even at 2 crores, and as developers, we must responsibly provide what buyers deserve for their hard-earned money. When it comes to real estate investments, a long-term perspective is advisable. Recently, prices have surged especially evi- dent in Gurugram and Delhi, driven by unwavering buyer interest. However, developers must ensure high-quality products for example, brand like DLF has maintained its reputation over years, making price inquiries almost unnecessary due to the trust they've built.”
When discussing the luxury segment, several factors need to be kept in mind said, Kalyan Chakrabarti. “The first factor to consider is the annual growth rate. A rate of 25-28% is unsustainable due to economic limitations, including inflation and GDP growth, which hover around 6% and 7%, respectively. Demand has been latent, but is now more robust due to a decade of positive macroeconomic growth, improved family incomes, and employment levels. Despite challenges in infrastructure, the overall trend indicates that prices will not decline significantly given the current cost structures and development cycles.”
Amit Goyal expressing bullish sentiments about Delhi NCR said, it houses most of the large multina- tional corporations, premier educational institutions and government bodies due to which areas like Golf Course Road, Central Delhi, and South Delhi are showing significant prosperity. “The increase in interest in Delhi-NCR market can be attributed to lifestyle upgrades, particularly seen in luxurious farmhouses featuring ample space and amenities like swimming pools. There is a strong demand for second homes in North Indian regions such as Rishikesh and Dehradun, thanks to better air quality and improved accessibility through highways. The farmhouse policy, however, needs revision to permit authorized construction, which has been delayed for many years.”
Ravi Shankar Singh presenting a different view said,“India, despite its progress, continues to have a very low per capita income. While the US and UK average annual home sales of approximately 4.5 million, and China significantly exceeds this with about 9.6 million homes sold annually, India remains significantly behind. In India's top seven cities, annual home sales are around four to five lakhs.”
Gurpal Chawla added, “The change is evident. The number of taxpayers, HNIs and Ultra-HNIs in the country is increasing. Last year, India saw the emergence of 93 new billionaires, compared to China's 55 new billionaires in 2023.The price points are expected to rise due to the limited inflow of units compared to other mature markets. Additionally, India's young population is playing a significant role in this trend. As Indians become more comfortable with the concept of leveraging debt for growth, significant progress can be anticipated.”
There is a strong demand for farmhouses in Delhi-NCR region. The farmhouse policy, however needs revision which has been delayed for many years.
The increasing demand for luxury residences is driven by rising disposable incomes, influence of global lifestyle and HNIs & NRIs growing interest in India for investment opportunities.
While prices have increased, future market dynamics od Delhi-NCR will likely see price dispersion return and a deceleration in immediate sale velocities at launch, necessitating a strategic approach for long-term success in this cyclical industry.
There is a significant distortion in the Delhi-NCR market where the premium and luxury segment is overwhelmingly dominant at over 70%, compared to the national average of 25-30%; such concentration is unsustainable and needs rebalancing.
Unlike Gurugram’s reactive approach, Noida has proactively advanced its infrastructure. If Gurugram's infrastructure does not adapt swiftly, its real estate significance may diminish, while Noida will continue to attract substantial interest & investments.
